The Rural Municipalities of Alberta (RMA) wants the Alberta Energy Regulator (AER) to prevent oil and gas companies with property tax arrears from operating.

It says steps taken to curb unpaid municipal taxes have had a nominal impact on collecting back taxes from "zombie" companies, and more must be done.

An annual member survey of rural municipalities indicates there are at least $251.8 million in municipal property taxes that have gone unpaid by oil and gas companies. Those who question the survey results argued the total unpaid tax amount includes legacy tax arrears likely never to be collected. 

For the 2023 property tax year, rural municipalities are facing roughly $43 million in unpaid taxes. In last year’s survey, that amount was approximately $50 million. While RMA views a 14 per cent reduction in “fresh” tax arrears a step in the right direction, the problem is far from being solved.

RMA president Paul McLauchlin says measures instituted don't target the "zombie" companies that continue to operate but have no interest in growing. 

"These companies often cut costs anywhere they can: in tax payments, in surface leases, in safety initiatives, in reclamation preparation," states McLaughlin in a news release. "These are the companies that are a risk to rural municipalities and all Albertans but are allowed to continue to pull Albertans’ resources from the ground and funnel profits out of the province.”

Measures put in place have assisted some municipalities, though. Ten per cent of the municipalities responding to the survey indicated they were able to utilize special lien status to recover unpaid taxes during bankruptcy or insolvency hearings.

Thirty per cent of respondents said the AER's policy of no longer approve licence transfers or new licences for companies with outstanding property tax arrears above $20,000 has assisted in their ability to recover taxes.

Still, McLauchlin says the issue is far from licked.

“We are being used by a small number of zombie oil and gas companies to not only subsidize the taxes they don’t want to pay, but to prop up their very existence. The AER has allowed these companies to operate for such a long time, with such poor financial management, that they are now unequipped to deal with the consequences of them failing,” said McLauchlin.

"At the end of the day, we need a regulator, not a cheerleader.”

RMA proposes the stricter measures be phased in over several months to give oil and gas companies time to get their finances in order.